Trade-Policy Dynamics : Evidence from 60 Years of U.S.-China Trade
This paper studies the growth of Chinese imports into the United States from autarky during 1950–1970 to about 15 percent of overall imports in 2008, taking advantage of the rich heterogeneity in trade policy and trade growth across products during...
| Main Authors: | , , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/421231627562264647/Trade-Policy-Dynamics-Evidence-from-60-Years-of-U-S-China-Trade http://hdl.handle.net/10986/36052 |
| Summary: | This paper studies the growth of Chinese
imports into the United States from autarky during 1950–1970
to about 15 percent of overall imports in 2008, taking
advantage of the rich heterogeneity in trade policy and
trade growth across products during this period. Central to
the analysis is an accounting for the dynamics of trade,
trade policy, and trade-policy expectations. The analysis
isolates the lagged effects of past reforms and the current
effects of uncertainty about future reforms. It builds a
multi-industry, heterogeneous-firm model with a dynamic
export participation decision to estimate a path of
trade-policy expectations. The findings show that being
granted Normal Trade Relations (NTR) status in 1980 was
largely a surprise and that, in the early stages, this
reform had a high probability of being reversed. The
likelihood of reversal dropped considerably during the
mid-1980s, and, despite China’s accession to the World Trade
Organization (WTO) in 2001, changed little throughout the
late 1990s and early 2000s. Thus, although uncertainty
depressed trade substantially following the 1980
liberalization, much of the trade growth that followed
China’s WTO accession was a delayed response to previous
reforms rather than a response to declining uncertainty. |
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